Fracturing rules bring controversy to lonesome prairie

Jennifer A. Dlouhy | Hearst Newspapers

Published
5:08 pm CDT, Saturday, April 7, 2012

McKENZIE COUNTY, N.D. -- Amid industry fears that looming regulations threaten technology that has revolutionized oil and gas production, Interior Secretary Ken Salazar has a quick comeback: The change will be better for both industry and the environment.

Both sides are referring to pending Bureau of Land Management rules related to hydraulic fracturing on federal lands. During a visit to the booming Bakken formation in North Dakota last week, Salazar said the rule will include “common-sense” mandates that could bolster the industry’s image by helping soothe fears about fracturing.

“Our hope is that by approaching hydraulic fracturing in a way that creates confidence among the American public, it won’t become the Achilles heel of the oil and gas industry,” Salazar said. “We can do oil and gas development and, at the same time, make sure that we’re taking measures to protect our environment and assure the American public.”

About a third of the United States’ natural gas production now comes from the hydraulic fracturing process, which involves blasting water, sand and chemicals deep underground to crack rock formations and unlock the hydrocarbons trapped inside.

Energy analysts say fracturing -- when combined with horizontal drilling techniques -- is essential to recovering a 100-year supply of natural gas from shale formations nationwide, including the Marcellus in New York and Pennsylvania and the Eagle Ford in Texas. The process also is being used to extract crude from the Bakken formation and is credited with helping drive domestic oil and gas production to an eight-year high in 2011.

But environmentalists warn that fracturing chemicals can contaminate drinking water supplies and that natural gas can pollute groundwater if it leaches out of poorly designed and cemented wells. Those fears have stoked nationwide calls for a clamp down on fracturing, including a ban on new drilling in New York.

“What has made much of what we are seeing today possible has been the new technology around horizontal drilling as well as hydraulic fracturing,” Salazar said. But, he said, that could be jeopardized “unless we are able to move forward with a program that assures the American public that it is being done safely and responsibly.”

Industry representatives acknowledge that companies initially were slow to respond to concerns about fracturing but have since stepped up with a website for disclosing details about chemicals they use. At the same time, states have imposed regulations on hydraulically fractured wells.

“The secretary’s Achilles’ heel analogy is a little dated at this point,” said Dan Naatz, a vice president with the Independent Petroleum Association of America. “Industry has moved forward. The states are moving forward. Things have progressed, and in many ways, the secretary is trying to address a problem that doesn’t exist anymore.”

Oil and gas industry representatives say a new drilling rule -- even if it is just for wells on federal lands -- further will discourage exploration in those areas.

“States are effectively requiring disclosure without discouraging investment,” said Reid Porter, an American Petroleum Institute spokesman. “There is absolutely no need for the federal government to add bureaucratic layers where disclosure is already occurring.”

During his two-day energy tour of North Dakota last week, Salazar visited temporary housing for oilfield workers who have swarmed the state and checked out a rig drilling a well for The Woodlands, Texas-based Newfield Exploration Co.

The Newfield project is the type of work that would be affected by the Interior Department’s new rule. Although Newfield is drilling on private land, the company is set to drain a subsurface field that includes federal minerals.

Using horizontal drilling techniques, Newfield workers are steering drilling pipe to a location two miles down and two miles away, keeping inside a target zone that is just 10 feet thick. After the well is drilled, it will be stimulated by hydraulic fracturing.

The whole process -- drilling and completion -- will cost roughly $10 million to $11 million, with the promise of initially delivering 3,000 barrels per day of oil, Newfield officials said.

The Interior Department’s Bureau of Land Management is putting the final touches on its proposed rule, which would set new standards for fractured wells on roughly 700 million acres of public lands.

The measure, which could be formally proposed later this month, would require companies to publicly disclose chemicals that make up the fluids they intend to pump underground, though there would be an exemption for trade secrets.

Federal officials recently signaled they are considering letting companies disclose the data through the industry-backed FracFocus website, rather than directly to federal regulators before beginning operations. But an initial draft of the government’s proposal called for companies to submit that information directly to regulators well before commencing work.

The broad outlines of the draft rule and the formal proposal are expected to be the same, though some provisions may change. According to the draft, companies would also be forced to win the government’s approval before fracturing wells on federal lands -- something not required for routine work now. They also would have to give the government details on how they will supply water to sites and how much they expect to collect back from the ground.

The measure also is set to impose new mandates for the design and monitoring of wells, including possible requirements for mechanical integrity tests to confirm the well casing is strong enough to prevent leaks.

Oil and gas industry leaders warn that the requirements could duplicate _ and even contradict _ state regulations. fracturing. Several states, including Texas, already have chemical disclosure requirements on the books.

Industry lobbyists also insist a one-size-fits-all set of well mandates won’t work for exploration that varies from formation to formation.

The risk is that drilling on federal lands will take longer and cost more as the regulatory hurdles to that work grow higher, Naatz said.